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A

Advance assurance — a letter from HMRC confirming that a company appears to qualify for EIS or SEIS relief. Not a guarantee, but strong evidence of eligibility. Should be obtained before investment. Advance Subscription Agreement (ASA) — a UK convertible instrument. An investor pays money now in exchange for shares to be issued at the next qualifying funding round, at a discount to that round’s price. No interest accrues. EIS relief is claimed at conversion, not at the point of signing the ASA. Angel investor — an individual who invests their own money into early-stage companies, typically in exchange for equity. Angel investors are distinct from venture capitalists, who manage funds on behalf of others. Anti-dilution — a shareholder protection that adjusts an investor’s share price or count if the company raises future funding at a lower valuation (a down round). Weighted average anti-dilution is the most common form in UK angel deals. ARR (Annual Recurring Revenue) — the annualised value of a company’s recurring subscription revenue. The primary revenue metric for SaaS businesses.

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B

Bad leaver — a founder or employee who leaves a company by resigning, being dismissed for misconduct, or breaching their obligations. Bad leavers typically forfeit unvested shares and must sell vested shares at nominal value. Berkus Method — a valuation method for pre-revenue businesses that assigns a value increment (typically £250k–£500k) to each of five de-risking milestones: sound concept, prototype, quality management team, strategic relationships, and initial sales. Bridge round — a short-term capital raise, typically from existing investors, to extend runway while a larger round is being closed or a specific milestone is reached.

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C

Cap table (capitalisation table) — a complete record of a company’s equity ownership, showing every shareholder, their shares, the type of shares, and their percentage ownership. Should always be reviewed on a fully diluted basis. Cliff — the minimum period an employee or founder must work before any of their shares vest. A one-year cliff means no shares vest in the first year; at the one-year anniversary, the first tranche vests immediately. Convertible note — a loan that is designed to convert into equity at the next funding round rather than be repaid in cash. Interest accrues and there is a maturity date. Less common in the UK than ASAs. Coverage map — AngelHub’s 11-topic due diligence progress grid. See The coverage map explained.

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D

DD (Due Diligence) — the structured investigation of a company before investment. In AngelHub, DD is organised across 8 work packages covering team, market, IP, product, financials, legal, commercial traction, and risk. Disclosure letter — a document prepared by the company that qualifies the warranties in the investment agreement. Disclosed matters cannot form the basis of a warranty claim. Must be read carefully before completion. Drag-along right — gives a majority of shareholders the right to require minority shareholders to sell their shares on the same terms in an acquisition. Protects acquirers from small shareholders blocking a deal.

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E

EIS (Enterprise Investment Scheme) — a UK government scheme that provides 30% income tax relief to qualifying individuals who invest in qualifying companies. See EIS/SEIS basics. EMI (Enterprise Management Incentive) — a UK government-approved employee share option scheme providing highly favourable tax treatment for qualifying companies and employees. Equity — ownership of a company in the form of shares. Angel investors receive equity in exchange for their investment.

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F

Fully diluted — a cap table calculation that assumes all possible shares have been issued, including unexercised options, unexercised warrants, and unconverted convertible instruments. The relevant basis for calculating ownership percentages and investment returns.

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G

Good leaver — a founder or employee who leaves a company due to death, permanent incapacity, or other agreed circumstances. Good leavers typically retain their vested shares at market value.

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H

Heads of terms — a document recording the agreed commercial framework for an investment — valuation, investment amount, equity, governance provisions, and conditions. Usually non-binding on main commercial terms but represents a strong moral commitment.

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I

Investment agreement (IA) — the primary binding contract governing an angel investment. Records the subscription mechanics, the representations and warranties, the conditions to completion, and the disclosure letter.

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L

Lead investor — the angel or investor who takes primary responsibility for coordinating a funding round — negotiating terms, leading due diligence, and managing the process to completion. LTV:CAC — Lifetime Value to Customer Acquisition Cost ratio. A key SaaS metric. Should be at least 3:1; below 2:1 indicates the business is spending more to acquire customers than it makes from them.

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M

MRR (Monthly Recurring Revenue) — the monthly equivalent of ARR. The base metric for tracking SaaS growth on a month-by-month basis.

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N

NRR (Net Revenue Retention) — the percentage of revenue retained from existing customers after accounting for churn, downgrades, and expansion. NRR above 100% means the existing customer base is growing in value without new customers.

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P

Pre-money valuation — the value of the company before the new investment is added. The basis on which equity percentages are calculated. Pre-money + investment amount = post-money valuation. Project Lead — in AngelHub, the angel investor responsible for coordinating due diligence on a specific deal. See What is the Project Lead role.

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R

Reserved matters — decisions that require the consent of a defined majority of investors, in addition to normal board or shareholder approval. Typically include: raising new equity, changing the articles, selling the company, and making material changes to the business.

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S

SEIS (Seed Enterprise Investment Scheme) — a UK government scheme that provides 50% income tax relief to qualifying individuals who invest in qualifying seed-stage companies. See EIS/SEIS basics. Shareholders agreement (SA) — the private contract governing the relationship between all shareholders of a company. Covers governance, minority protections, transfer restrictions, and exit mechanics. Not filed at Companies House. Scorecard Method — a valuation method for early-stage companies that adjusts a benchmark valuation based on factors including team quality, market size, product progress, competitive environment, and traction.

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T

Tag-along right — gives minority shareholders the right to sell their shares on the same terms as a majority shareholder in an acquisition. Protects minority investors from being left behind in a partial sale. TRL (Technology Readiness Level) — a scale from 1 (basic principles observed) to 9 (system proven in operational environment) used to assess the maturity of a technology. Commonly used for deep tech and university spinout investments.

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V

Valuation cap — a maximum pre-money valuation at which an ASA or convertible note can convert. Protects early investors from being significantly diluted if the next round is at a much higher valuation than when they invested. Vesting — a mechanism by which founders and employees earn their equity over time rather than owning it outright from day one. Standard structure is a four-year vest with a one-year cliff. VC Method — a valuation method that works backwards from a projected exit valuation to determine what entry price produces an acceptable return at the target ownership percentage.

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W

Warrant — the right to purchase shares at a fixed price in the future. Similar to an option but typically issued to investors or lenders rather than employees. WNTBB (What Needs to Be Believed) — AngelHub’s investment decision framework. Identifies the specific assumptions that must hold for an investment to succeed and assesses the evidence for each. See the AngelAI knowledge base for the full framework.